Question

Besides the planning stage, managers may also use budgets in the control phase by doing which of the following?

Question 13 options:

	Discuss with sales personnel the needs and growth of customer demand.
	Use only Excel to make the computations needed to share the budget with the whole company.
	Check in with supervisors in developing the amount that can be produced in a particular department.
	Comparing the budgeted costs with actual costs to identify variances and problems.

Answer 1

Answer for Question 13:

Managers may use budgets in the Control Phase for Comparing the Budgeted Costs with Actuals to identify variances and problems.

The answer for this question is option D: Comparing the Budgeted Costs with Actuals to identify variances and problems.

Reason: This question is referred to Budgetory Control in Finanical Management.

Important objectives of Budgetory Control Management are

1. Planning the budgets
2. Controlling
3. Co-ordinating

Planning stage: This is where future plans are chalked-out. Budgets required at each stage of project life is written. All the costs involved are included. This is estimation of budgets. This stage involves detailed planning for purchases, assets procurements, production, distribution channels, marketing etc. Proper planning is necessary for any project to take a shape.

Controlling Stage: Controlling is essentially looking back and taking steps in present. Only planning is not enough. There has to be a channel which keeps an eye on the project if it is going in the way it was planned. A system that ensures the work of project goes according to the plan. If not, changes or deviations are noted and steps are taken to redure the deviation. The main objective of this system is to compare the Budgeted Costs with Actuals to identify variances and problems.

Why other options are not correct?

Option (A): Discuss with sales personnel the needs and growth of customer demand.

Reason: This option only discusses about the Sales. Budgetory planning includes pre-sales activities also.

Option (B): Use only Excel to make the computations needed to share the budget with the whole company.

Reason: Only Excel spreadsheet will be used for calculation and making graphs. Analysis and Interpretation must be done by humans. Also, sharing budget with the whole company is not required.

Option (C): Check in with supervisors in developing the amount that can be produced in a particular department

Reasonn: This option only discusses about revenue generation in different departments. Budgetory Control is a larger task which takes in account all the costs involved in the project.

Conclusion: There are 3 stages in Bugetory Control. All 3 are important. But analytical efforts are more needed in the controlling stage. This is where comparison happens and futher progress of proposed project can be stopped or kept going according to the plan. Thus, Option D fits in well.

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